A piece of equipment in the 5-year MACRS asset class is being considered that ma- The equipment changes cash flows as follows Revenues $5/pinball COGS $1/pinball Fixed cost: $1000 per year The equipment is expected to last seven years, at which point it will have zero valu Bank interest rates are 5% annual interest, and overall tax rate is 21%
A piece of equipment in the 5-year MACRS asset class is being considered that ma- The equipment changes cash flows as follows Revenues $5/pinball COGS $1/pinball Fixed cost: $1000 per year The equipment is expected to last seven years, at which point it will have zero valu Bank interest rates are 5% annual interest, and overall tax rate is 21%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![A piece of equipment in the 5-year MACRS asset class is being considered that makes pinballs
The equipment changes cash flows as follows
Revenues $5/pinball
$1/pinball
Fixed cost: $1000 per year
COGS
The equipment is expected to last seven years, at which point it will have zero value
Bank interest rates are 5% annual interest, and overall tax rate is 21%
<What is minimum number of pinballs that must be made and sold each year after accounting for taxes.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8c7df49b-72aa-4fd9-9581-6a6b9c0fee16%2F5c525fc0-e1d2-4666-9912-5958609cf823%2F9jwcl0j_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A piece of equipment in the 5-year MACRS asset class is being considered that makes pinballs
The equipment changes cash flows as follows
Revenues $5/pinball
$1/pinball
Fixed cost: $1000 per year
COGS
The equipment is expected to last seven years, at which point it will have zero value
Bank interest rates are 5% annual interest, and overall tax rate is 21%
<What is minimum number of pinballs that must be made and sold each year after accounting for taxes.
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